Nippon Steel and JFE Steel Acquire Additional Interests in Australian Coal Mine

Nippon Steel and JFE Steel jointly announced on Wednesday both companies take additional interests in Integra coal mine, New South Wales, Australia. Nippon Steel, JFE Steel and POSCO of South Korea acquire each 2.35% interests from Toyota Tsusho Corporation. The three steel makers will hold total 5.95% shares in the mine. Toyota Tsusho will also transfer its interests in the mine to Chubu Electric Power, Japanese power company.

Steel makers aim to increase fine grade raw material procurement from self-investing mines when coal price is steeply rising due to global supply tightness. The transaction will close within several months including approval from local authority. Vale of Brazil continues to hold 61.2% shares in the mine while shares held by Nippon Steel, JFE Group, POSCO and Chubu Electric Power increase to each 5.95%. Toyota Tsusho’s equity lowers to 15%.

Integra mine is located in Hunter Valley. The mine produces coal at 3.3 million tonnes per year, 75% of which is hard coking coal and semi hard coking coal and 25% is thermal coal. The mine can continue operation for 15 years, while expected for output expansion and mine life extension in future.

Coal supply is globally tight. China has aggressively increased coal import. Steel demand is also expanding in emerging countries such as India and Brazil. In Australia, supply trouble occurred due to floods at the end of 2010. Steel makers quickly moved to seek alternate materials but spot coal price jumped up. Contracted coal price would rise in and after April. Meanwhile, raw material suppliers are requiring shorter contract period against steel makers. Steel makers are trying to secure raw material supply from self-investing mines in such circumstances.